AUD/USD

Am I the only one on the ground here in Australia that finds these unemployment numbers to be absolute bullshit? Maybe it's because I'm in Queensland, but I look around and I just don't see the reality reflected in the stats.

i think food manufacturing and mining is good, retail also, im in vic and i think its fairly easy to get a job here if you want to work. alot of companys are bringing in overseas labour cos they cant find aussies to fill the positions

I liked that one. What you see around is just bush...

Come down to Sydney.

The higher part time jobs make sense for the silly season. Those will disappear after the 26th of January.

Nobody's buying housing, and QLD is in the shitter economically, and everyone wears it on their facial expressions and attitudes here. I'm biased because I deal with it on a daily basis, but I don't see any upside.

Also, China tightening lending is not going to help. People getting squeezed on everything from car rego to public transport and housing rates isnt going to help. I can't imagine how people can afford life here in oz without dunking desperately into credit card debt, which also explains the new record rate of debt. Apparently Australians are more in debt now than the Americans on a per capita basis.

I'm looking for a sustained downtrend. I won't be surprised to see .85 in a quarter.

Sinner can I ask what is you medium term outlook for the audusd and eurusd??

Hey. Check out EUR/GBP. GBP pairs move a lot better than USD pairs lately.

Ok mission complete (half mission) ,SL +1 now i can go to sleep...



Cheers

Maybe they'll try for a double top at 0.9406? I'm always long on A/J anyway - the rollover is too good to pass up given the shit interest I earn in my bank account in the UK. I think December's reaction to AUD employment figures was different because market wanted to profit take. I'm not seeing a short on EUR at this time either.

Was just watching Bloomberg - some stuff on Commonwealth Bank stopping withdrawals from some mortgage fund again. Apparently defaults are up over in Oz since the interest rate hikes but the market isn't too bothered because your banks are so healthy they can sustain a few hits.

Hi there,

To understand Australian unemployment data you need to consider definition of employed person. The Australian unemployment rate is not a ratio of full time positions (or equivalent) avaiable to the total labour force. Here in Australia employed person is someone who worked ONE HOUR or more during the reference week. So to fill one full time position (38h weekly) you can: A) take one person for 38h, or B) 2 people 19h or C) 4 people - less then 10h, etc. In the scenario A) only 1 person doesn't appear in unemployment statisctic, in case C) there are 4 employed people due to ABS statistic.

Please find a definition of Employed person from ABS site below.

Employed

All persons aged 15 years and over who, during the reference week:

1. <LI type=square>worked for one hour or more for pay, profit, commission or payment in kind in a job or business, or on a farm (comprising employees, employers and own account workers); or <LI type=square>worked for one hour or more without pay in a family business or on a farm (i.e. contributing family workers); or <LI type=square>were employees who had a job but were not at work and were:

   1. 1. <LI type=disc>away from work for less than four weeks up to the end of the reference week; or <LI type=disc>away from work for more than four weeks up to the end of the reference week and received pay for some or all of the four week period to the end of the reference week; or <LI type=disc>away from work as a standard work or shift arrangement; or <LI type=disc>on strike or locked out; or
      2. on workers' compensation and expected to return to their job; or

2. were employers or own account workers, who had a job, business or farm, but were not at work.

----------
harom

Hi amyc,

We (Australians) are an export country. Always have been. Export 2/3 of our food, 2/3 of our minerals, 2/3 of everything! Usually worst of all is the fact that we firesale it, always selling it to China for pennies on the dollar when in fact our own domestic consumption could account for a healthy demand if we based our economy around that ideal instead of the ideal "dig it up and ship it off".

This might seem like an obvious thing to say but it is extremely important because there are two things happening for AUDUSD:

1. Extreme commodity rally for Aussie commodities (possible bear market rally)
2. Extreme capital inflows on the AU debt market for Aussie paper: we (and by we, I mean the big 4 banks + Maquarie) sell foreign denominated debt at a huge rate since Sep 2008 and the demand is huge. As far as I know, capital inflows into Aussie debt are only paralleled on a % relational scale by the US Treasury market (although I don't currently have any numbers to back that up looking at my notes, so don't quote me on it).

To my mind, almost all of the 0.65-0.93 rally is on the back of foreign capital inflows for Aussie paper. If you were a Swiss bank and the government said "we know you are technically insolvent, don't tell anyone, here is 9,999,999,999,999 CHF at 0% to shore you over" - what would you do?

Hint: the answer is contained within the price chart for pairs like EURAUD, EURNZD, AUDCHF, etc. You go out and buy a shitload of debt at 3% because you are already insolvent anyway and the government isn't going to give you a margin call! Go look at the news releases for CBA etc. They have already sold off $300m in CHF and HKD denominated debt in 2010 alone. Someone on another forum called this "chicken feed" well I replied, "chicken feed only if you can sell it". Multiply it by each bank and think of how many such sales have been completed in the last 12 months.

Everyone has been pinning this rally in AUD squarely on the back of commodities like gold, copper, wheat, etc. But let's face it - those commodities have rallied several 100s of % more than AUD in the intervening period. They have all rallied for the same reason: they are priced in USD.

So I am trying to say: foreign capital debt demand has been the sole source of this AUD rally from the lows (helped along of course by the RBA buying AUD and Fed selling USD).

But this 3% we can offer the world is based on our productive output. Our real productivity. I am not talking about the service industries or whatever, I mean manufacturing, commodities, IT, etc. As a country, our productivity is attractive to the world because of a historically low exchange rate against the USD and EUR (or German DM pre Euro).

Foreign capital debt demand is killing our competitiveness at the only thing that is keeping us going. The big 4 banks are only too happy to write this paper and sell it on the open market - they are the ones that get to play carry trade on the foreign exchange (for example short EURAUD) with the result!

In the end this situation will overheat. I am stating this as an inevitable fact and you can quote me on it if you like. I am viewing several possibilities such as:

1. US Treasury issuance becomes so great that all other debt is crowded out of the market.
2. Production competitiveness becomes so low due to the exchange rate that the private sector implodes due to lack of foreign interest - at which point the government has even less tax revenue than they currently do. This is in fact already occuring, I read recently about a big movie they were going to shoot here which was cancelled due to the exchange rate only!
3. Chinese commodity speculation bubble explodes (anticipating this soon) - demand dries up - we crap out. AUD stays strong (because as I said the AUD rally is based not on commods) and we are left with nobody to sell anything to but ourselves who can't afford it now because we geared our entire economy to export 2/3 of everything instead of keeping strong local demand/consumption!

I will enclose an example % chart (src: finance.yahoo.com). It shows an Aussie gold mining company which has an unhedged order book (i.e. fully exposed to the AUD gold price), ASX:GOLD which is our local gold ETF, the NY:GLD which is the New York gold ETF, an American gold mining company which has an unhedged order book (i.e. fully exposed to the USD gold price) and the spot AUDUSD rate.



It is plain to see that demand for gold against the USD and AUD against the USD has been consistently strong over the last 12 months. Has that translated into productivity - and thus profits - for our private sector (which is our greatest employer) the same way it has for (e.g.) American private sector? Clearly not.

Our greatest asset: productivity and exports - is being written off as debt to other countries who just want their 3 minus 0.5%!

So what is my medium term outlook? The game will continue to be played until it all implodes. How will we know when the piper stops playing? When the liquidity tap at the Fed turns off? When shit really is about to hit the fan for the AUD?

Watch EURAUD and EURNZD.

I will write a medium term outlook for EURUSD which you requested also. Hopefully it will be more analysis and less rant (reading back on my post now).

good posting of your analysis!! keep them coming! do u post only on aud/usd,what abt nzd/usd?

Hi Sinner thanks for the informative post.

In my opinion we have six to twelve months till the smoke screen clears and we see exactly how bad things are. Do agree with your line of thought.

Barra

Thanks Sinner

Appreciate your thoughts.

I will start watching the EURAUD and EURNZD thanks for the tip

I just wonder if the end is coming sooner rather than later though. Aud has looked bearish to me since mid November and the charts are just showing me situations that look like March 09 in reverse. Also the index markets look bearish to me as well, in fact I think there may be a short term top coming in tonight at 1150-52 on the S&P. I guess all will be revealed by the weekend.

Thanks, care to explain why ?

I asked the same question to him regarding that post........and no answer given??

Sinner, that's some first-rate analysis. Bookmarked for great justice.

Yeah oh well name calling isn't nice we are all here to learn from each other and share our thoughts and ideas.

Pick your moves. Current rally in GBP has gold tanking in the background. This morning AUD took a run for it but NZD did not follow. This week USDCAD has not been following oil faithfully. This week has allowed me to be a dollar bull and JPY bear even though the pair itself took a hiding.

If you are bearish there is no need to short the most bullish pair, go out and find something worth shorting. I usually check the daily charts of CME globex currency and bond futures before I start trading the FO to help identify weak/strong markets.

I'll give an answer:

Constant stupid posting "shake that money tree" (just as idiotic as the KABOOM bullshit occurring in the Auslanco thread), posting analysis and charts from a broker service without attribution (this is called copyright infringement, in case you didn't know), etc.

This is supposed to be a forum of traders, but sticking feathers up your butt doesn't make you a chicken.

Yes 100% true and I believe that most persons here would agree with you on that point. Anyway start shaking that tree really hard, lets get this AUD moving again

cheers and regards